Australian dollar rises, presumably due to improving risk sentiment amid de escalated tensions in the Middle East.
The Australian Dollar (AUD) halted its two-day losing run on Monday, buoyed by signs of de-escalation in international tensions. An Iranian official’s remark that there are no urgent preparations for retaliation against Israeli attacks contributes to the better atmosphere.
The Australian dollar may encounter hurdles as market perception shifts toward the RBA decreasing policy rates before the end of the year.
The Australian Dollar may face problems ahead, particularly as domestic inflation continues to decline, The latest estimates from the Reserve Bank of Australia (RBA). Furthermore, the continuously tight labor market may lead to calls for an RBA rate cut before the end of the year.
The US dollar may rally as Federal Reserve members’ views indicate a hawkish stance on monetary policy tightening.
The US Dollar Index (DXY), which measures the US Dollar (USD) against six major currencies, is under pressure despite an uptick in US Treasury yields. The potential downside for the USD pair may be limited by statements from Federal Reserve (Fed) officials indicating a shift toward a more hawkish posture.
Daily Market Movers: The Australian dollar rises on improving risk sentiment.
On Monday, the People’s Bank of China maintained its loan prime rate (LPR) at 3.45%. The LPR is an important benchmark rate for Chinese banks for establishing interest rates for loans made to its customers. Given the significance Given the close economic linkages between China and Australia, any changes in Chinese monetary policy could have an influence on the Australian market.
China’s Ministry of Commerce has put a new tariff on US imports. China has placed a 43.5% levy on imports of propionic acid from the United States. This molecule is widely used in a variety of industries, including food, feed, insecticides, and medical purposes, according to Reuters.
The Australian dollar strengthened over the weekend, despite no notable global news. According to “The Guardian,” US Secretary of State Antony Blinken encouraged calm after an Iranian source confirmed that there is no imminent plan for retaliation following the claimed Israeli missile assault. Blinken made these statements while speaking to the press on Friday. following the G7 summit of foreign ministers in Capri, Italy.
On Friday, Chicago Fed President Austan Goolsbee stated that progress on inflation had “stalled,” and that the Federal Reserve’s current restrictive monetary policy was reasonable. Meanwhile, Atlanta Fed President Raphael Bostic announced that the US central bank would not decrease interest rates until the end of the year.
Traders are likely to keenly watch the upcoming Purchasing Managers Index (PMI) data from both countries on Tuesday, followed by the Australian Consumer Price Index (CPI) data on Wednesday and the US Gross Domestic Product Annualized on Thursday.
